It has been a while since I posted. Not too much going on here – quick portfolio update will follow in a day or two as there have been a few developments….
I have done quite a bit of work on Invista European Real Estate. I have build a model (link here) This is a European commercial property fund, launched late 2006 – right into the peak of the bubble. There were big falls in NAV – 50% in 2009 and the fund rapidly got itself into trouble with loan covenants. It issued preference shares and warrants in 2010 to survive and has scraped along the bottom ever since.
It now has a MCAP of EUR 7.9m. Down from 200m plus on IPO. This is not a story of value creation.
I came to look at it as I was doing a trawl of AIM / smallcap property stocks to see if I could find anything with promise…
Superficial attraction is that the current NAV is 52m EUR – vs a 7.9m MCAP means it is a potential 5/6 bagger.
The downside is it 52m of NAV attached to 272m EUR of debt / c324m of total assets. A mere 16% decline in the total asset value wipes out the shareholders. Valuing property is an inexact science, transaction volumes are down so this isn’t as implausible as it sounds. (It isn’t actually this bad as some assets are under contract to be sold but the point still holds///)
There are however, a number of other factors to consider:
Deep Value Investments Blog 